Wheat Commentary
May Chgo Wheat closes 3 ¾ cents higher ($5.17 ¾), July 3 cents higher ($5.14 ½) and Dec 2 ¼ cents higher ($5.53)
May KC Wheat closes 1¼ cents lower ($5.18 ½), July 1 ¼ cents lower ($5.38 ¼) and Dec 1½ cents lower ($5.82)
Slightly higher Chgo prices vs. slightly lower KC prices. Why the difference? My opinion is that Chgo chose to trade with European prices as they hit 7-month highs today. Chgo has a tendency to be susceptible to global influences vs. KC (it’s the speculators choice given the higher daily volume as well as the higher open interest). I believe KC was softer due to the better crop conditions and forecasts over the near term that calls for possible beneficial moisture. Because the HRW crop is behind in its seasonal maturity rainfall over the near term can still help the yield.
Interior cash wheat markets are quiet as well as export locations. Spreads in both Chgo and KC were able to regain some of what they lost with the recent flat price break. What they were able to recoup does not look like a rejection of the recent sell-off.
The bounce back up does not change what looks like a potential interim high for wheat prices. Granted futures direction all depends on how the winter crops finish as well as the start to the spring crop. I can’t find any major wheat producer (globally) that is not looking at some sort of problems. Many of these problems can be solved with the proper care from Mother Nature and some of that is in the respective forecasts. As far as the USDA reports are concerned I don’t see anything of consequence for the old crop; just a reminder we have more than ample supplies. New crop could be a bit of a wild card; trade ideas have the new crop projected carryout declining by about 130 million bu. vs. old crop projections. Don’t forget the USDA is going to give us two sets of global carryout data for wheat, rice and coarse grains. One figure will include Chia’s stocks the second figure will not include China. Why is the USDA doing this – China is not known to export these commodities so why suggest they could be available to the world. Last month China accounted for 46.75% of the world’s wheat stocks, 35.95% of the world’s coarse grain stocks and 65.08% of the world’s rice stocks.
Daily Support & Resistance for 05/09
July Chgo Wheat: $5.05 – $5.25
July KC Wheat: $5.30 – $5.50
The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.